Right now, their only clear agreement is that, barring another economic downturn and events beyond the state’s control, revenues will climb steadily, albeit slowly.
In the words of the governor’s budget director, it will be a “long, slow, but positive growth” for the Arizona economy.
Both the executive branch and the Legislature have adopted conservative budget projections, but the figures released today by legislative analysts are more cautious.
The Joint Legislative Budget Committee, the Legislature’s research arm, is forecasting a $583 million balance at the end of the current fiscal year.
In contrast, the governor believes the state will get about $615 million, a difference of $32 million.
JLBC also predicts a deficit in fiscal 2014.
The governor, on the other hand, projects that the state will be $330 million in the black, even when taking into account her multi-year spending plan.
Reconciling these projections is important since the presumed growth rates will define how much spending leeway the state can have in the next few years.
The revenue projections — and how conservative or liberal they are — will help dictate the shape of the budget.
According to JLBC, if revenue trends hold stead, the state will end in the black in the two next two fiscal years and the deficit in FY14 shrinks to a manageable level.
But in a worst-case scenario – if the economy doesn’t grow as much as hoped and groups suing the state over earlier budget cuts triumph in court – lawmakers could be looking at $360 million in deficit in FY13 and $1 billion in FY14.
JLBC cautioned that projecting the budget for three years is inherently unreliable. A two percent error in the projections could mean a $500 million difference in the budget by the third year.
JLBC also noted that there are factors that are beyond Arizona’s control that could impact its budget, such as the European debt crisis, which could lead to another recession.
The legislature’s analysts are also predicting modest but rising revenues — 5.3 percent in FY12, 5.1 percent in FY13, 6.9 percent in FY14 and 7.9 percent in FY15.